CRYSTAL AMBER FUND LIMITED
Monthly Net Asset Value
Crystal Amber Fund announces that its unaudited net asset value (“NAV”) per share on 30 September 2014 was 155.02p (31 August 2014: 156.3p per share).
The proportion of the Fund’s NAV at 30 September 2014 represented by the ten
largest holdings, other investments and cash (including accruals), was as follows:
Top ten holdings Pence per share Percentage held of investee equity
AER Lingus Group plc 21.7 2.8%
Sutton Harbour Holdings plc 14.4 29.2%
Thorntons plc 12.5 13.0%
Leaf Clean Energy Company 12.0 19.2%
4imprint Group plc 10.5 0.9%
Tribal Group plc 9.7 4.6%
Juridica Investments Ltd 9.1 4.5%
NBNK Investments plc 8.5 27.9%
STV Group plc 6.5 3.5%
API Group plc 6.1 11.6%
Total of ten largest holdings 111.0
Other investments 44.0
Cash and accruals 0.0
Total NAV 155.0
Investment Adviser’s quarterly commentary on the portfolio
Over the quarter to 30 September 2014, NAV per share decreased by 3.6 per cent, or 3.3 per cent after allowing for the dividend paid during the period. Over the calendar year to date, NAV per share has decreased by 0.7 per cent or 0.4 per cent after allowing for the dividend paid.
The top three positive contributors to NAV growth over the quarter to the end of September were Sutton Harbour Holdings plc (1.76 per cent contribution),
4imprint Group plc (0.97 per cent) and Imperial Innovations Group plc (0.27 per
cent). The three main detractors were API Group plc (-1.34 per cent), TT
Electronics plc (-0.99 per cent) and Hurricane Energy plc (-0.90 per cent).
Over the quarter to 30 September 2014, the Fund disclosed an increase in its positions in Leaf Clean Energy Company, NBNK Investments plc and Thorntons plc and a reduction in its holding in Hayward Tyler Group plc.
During the period the Fund disposed of its investment in Imperial Innovations Group plc, realising a profit of £1.7 million, and completed the exit from its position in Devro plc.
Aer Lingus Group plc (“Aer Lingus”)
The company has been reporting good trading throughout the summer, particularly in its long haul routes to North America. Short haul shows signs of recovery following the impact of industrial action on forward bookings in May.
Aer Lingus is seeking to secure an agreement from its trade unions on the implementation of the pensions deal and is targeting a union ballot in late
October or early November and a shareholder EGM in December, with regulatory approval anticipated by the end of the year.
The Fund has expressed its support to management’s decision to accept the €191 million contribution recommended by the Expert Panel, however in our opinion the contribution should be capped at that level, which represents 25 per cent of Aer Lingus’ market value.
In our view, Aer Lingus operates in a competitive industry and its position is being damaged by ongoing industrial unrest. The Fund has indicated that it will only vote favourably to that extraordinary contribution if it opens a new period of industrial peace at the company.
Ryanair’s appeal against the Competition Commission’s ruling has been scheduled for the last week of November
The Fund took advantage of share price weakness and is now the largest
institutional shareholder in Aer Lingus.
Over the quarter, the shares fell by 4.7 per cent.
API Group plc (“API”)
The company announced a further deterioration of trading in its metallic
pigment product, a speciality of its Foils Americas business unit. As a result,
it is now anticipated that the unit will post a small loss for the year, versus
£1.7m operating profit last year. Management believes that there is a recovery in demand for the product, yet a long supply chain makes it difficult to assess with great confidence. API’s three other divisions, laminates, European foils and holographics are trading in line with expectations.
Following our engagement with the company, API announced that Richard Wright, chairman of the board, would be stepping down shortly, with the CEO assuming his role temporarily. We look forward to engaging with the new board leadership at API.
Over the quarter, the shares fell by 26.1 per cent.
4imprint Group plc (“4imprint”)
4imprint reported good trading, with revenue growth in its main US division of
23 per cent, well ahead of its 15 per cent target. In our view, these results
demonstrate that ongoing improvements in the company’s marketing systems are
increasing the effectiveness of its customer recruitment investments.
In September, the company announced a buy-in of 57 per cent of its pension fund
liabilities. This will utilise £13.7 million of its £26 million net cash.
Including a previous buy-in exercise, 76 per cent of liabilities are now
insured. The cost of the exercise, which could result in a buy-out of the
remaining liabilities in 2015, was £2 million less than previously indicated.
With this reduction of pension liabilities, the company enters a new phase,
which will include revising its pension contribution schedule as well as the
optimal levels of growth investment spend and dividend pay-out.
Over the quarter 4imprint’s share price increased by 15.9 per cent.
Leaf Clean Energy Company (“Leaf”)
Following the arrival of Mark Lerdal as executive chairman, Leaf’s board has
conducted a thorough review of its investee companies. As part of this review,
it has implemented a more conservative valuation policy, the result of which
has been a $63.4 million loss on revaluation. This has reduced the company’s
NAV per share from 142.66 cents to 89.9 cents per share, or 52.57p. Leaf’s
share price trades at 34 per cent discount to the revised NAV per share.
Over the quarter Leaf’s share price increased by 2.7 per cent.
Sutton Harbour Holdings plc (“Sutton Harbour”)
The company indicated at its Annual General Meeting that the board was focusing
on realising value from the former airport site. Trading remains in line with
market expectations, with improved property occupancy. The share price has
performed well as it has closed the discount to its NAV per share.
Over the quarter Sutton Harbour’s share price increased by 24.0 per cent.
Hurricane Energy plc (“Hurricane”)
Following June’s announcement of good results from its drilling campaign,
Hurricane reported additional data in September. The share price remains
disconnected from the growing value of Hurricane’s assets, and the Fund is
increasing its engagement to have this value recognised.
Over the quarter, the shares fell by 23.9 per cent.